Employee turnover: Definition, causes, and strategies to improve them

15 min read
Employee turnover: Definition, causes and strategies to improve them

Just like a beautifully crafted cake, a thriving workplace is made up of many layers, each one adding its unique flavor and texture. But what happens when one of those layers decides to crumble and leave the rest of the cake feeling a little less sweet?  Well, that's what we're here to talk about today.

Now, imagine this: you've spent hours perfecting your recipe for success. You've hired talented individuals, trained them to be your organization's best, and created a workplace culture that's as inviting as the aroma of freshly baked goodies. But here's the harsh reality—employee turnover can be the sneaky cherry on top that sabotages your efforts.

But fret not! With the right techniques, you can combat turnover by incorporating the right feedback tools. That's where employee engagement software comes in, serving as the secret ingredient to keep your team's enthusiasm and loyalty intact.

So grab your pens and notepads because we're about to unlock the secrets to a happy, thriving workforce.

Table of contents:-

What is employee turnover?

What is employee turnover?

Employee turnover refers to the rate at which employees leave an organization and must be replaced. You know, that moment when you thought you had the perfect combination of flavors, but one unexpectedly disappears, leaving a noticeable gap in the overall taste? Yeah, that's turnover for you.

Now, turnover can be a bit of a double-edged sword. On the one hand, a little bit of movement in the workplace can bring in fresh perspectives and ideas, just like adding a dash of zest to a recipe.

But on the other hand, excessive turnover can disrupt the harmony of your team, like trying to bake a cake with a revolving door instead of an oven. Not exactly a recipe for success, is it?

Here's the thing: while a little bit of turnover is inevitable, excessive turnover can leave a bitter aftertaste. It can lead to decreased productivity, increased costs, and a general sense of unease within the workplace.

Is employee turnover good or bad?

Is employee turnover good or bad?

Ah, the age-old question: is employee turnover a delectable delight or a bitter pill to swallow? Well, the answer lies somewhere in between, just like finding the perfect balance of sweetness in a cake. So, let's slice into this debate and have ourselves a little taste test!

Now, on the one hand, turnover can be seen as a positive ingredient in the workplace recipe. Just like adding a pinch of spice to a dish, a healthy level of turnover can bring in fresh perspectives, new skills, and innovative ideas. It allows for the continuous flow of talent, keeping your organization adaptable and vibrant.

But excessive turnover can disrupt team dynamics, lead to a loss of institutional knowledge, and create instability within your organization. It's like having too much of a good thing, resulting in an unbalanced flavor profile.

So, employee engagement's the secret ingredient to finding the right balance. When your team members are fully engaged, they're more likely to stick around. Engaged employees feel valued, motivated, and connected to the organization's mission, reducing the desire to seek greener pastures.

What are four types of employee turnover?

What are four types of employee turnover?

Let's dig deeper into the scrumptious world of employee turnover. Here are four types of turnover that can make or break your workplace culture:

Voluntary turnover

Picture this—a slice of cake that decides to jump off the plate and onto the dessert table at the party next door. Similarly, voluntary turnover occurs when employees willingly leave your organization due to better opportunities, career growth, or a change in their life recipe.

Involuntary turnover

Involuntary turnover happens when employees are asked to leave against their wishes, usually due to poor performance, misconduct, or organizational restructuring.

Functional turnover

It's when employees who aren't a good fit for their roles or the organization decide to pack their bags voluntarily. It's like a flavor that doesn't mesh well with the cake experience.

Dysfunctional turnover

Dysfunctional turnover refers to the loss of top-performing and highly skilled employees, leaving a void that's hard to fill.

But why does understanding these different types of turnover matter? Well, knowing the types of turnover can help you address them proactively.

Voluntary turnover vs involuntary turnover

Voluntary turnover vs involuntary turnover

Voluntary turnover occurs when employees willingly choose to leave your organization. It can be due to various reasons—seeking better opportunities, career growth, or a change in personal circumstances. It's like a flavorful ingredient that decides to explore other culinary adventures.

On the other side of the mixing bowl, we have involuntary turnover. It happens when employees are asked to leave against their wishes. It can occur due to poor performance, misconduct, or organizational restructuring. It's like an unexpected twist that disrupts the cake's original recipe.

Now, you might wonder, which type of turnover is more detrimental to your workplace? Well, the answer lies in the proportion and impact of each ingredient.

While voluntary turnover can sometimes bring positive change, too much of it can lead to instability and a loss of valuable talent. Similarly, excessive involuntary turnover can create an atmosphere of fear and uncertainty, leaving a bitter aftertaste.

By nurturing a positive work environment, providing growth opportunities, and recognizing employee contributions, you can reduce voluntary turnover. And when it comes to involuntary turnover, invest in performance management, clear communication, and fair practices to minimize its impact.

What is the main cause of employee turnover?

What is the main cause of employee turnover?

Ah, my inquisitive readers, the quest to uncover the main cause of employee turnover is like searching for that one elusive ingredient that throws off the entire cake recipe. So, let's put on our detective hats and follow the breadcrumbs to find the culprit behind this mystery!

There isn't just one single cause of turnover that we can blame entirely. It's more like a combination of flavors that can vary from organization to organization. However, if we were to identify a common thread that runs through many cases of turnover, it would be a lack of employee engagement. Ah-ha!

Employees can feel disengaged when disconnected from their work, the organization, or colleagues. It's like having a missing ingredient that leaves the whole cake feeling flat.

So, how can we address this? It all comes down to creating a culture that fosters employee engagement.

Just as a master baker carefully selects the finest ingredients, you must invest in meaningful employee experiences, offer growth opportunities, and provide a supportive work environment. Remember, engaged employees are like the secret sauce that adds flavor and depth to your organization.

Furthermore, leveraging employee engagement software can help you identify and tackle the underlying causes of disengagement. It's like having a trusty kitchen scale to measure the right proportions of ingredients. You can enhance engagement and reduce turnover by tracking metrics, collecting feedback, and implementing targeted strategies.

Now, let's not forget that while employee engagement plays a significant role, there can be other contributing factors to turnover—such as inadequate compensation, lack of recognition, or limited career growth.

How to calculate employee turnover?

How to calculate employee turnover?

Calculating turnover requires a pinch of precision and a dash of data. Let's get cooking!

To start, we need two key data: the number of employees who left during a specific period and the average number of employees during that same period.

Now, grab your calculator and divide the number of employees who left by the average number of employees. Multiply the result by 100 to get the turnover percentage. Voila! You've calculated employee turnover.


Employee turnover rate = (Number of employees who left / Average number of employees) * 100

Beginning number of employees = 100

Employees who left = 20

New hires = 10

Average number of employees = (100 + 90) / 2 = 95

Employee turnover rate = (20 / 95) * 100 ≈ 21.05%

But hold your spatulas, folks! We're not done yet. It's essential to analyze turnover data further to understand the reasons behind it. Is it voluntary or involuntary? Are there patterns among certain departments or positions? Analyzing turnover data helps you identify trends and take proactive steps to reduce turnover.

How to reduce employee turnover?

How to get over undesirable turnover rates!

Reducing turnover requires a blend of ingredients and a sprinkle of strategic thinking. Let's get cooking!

Create a nurturing culture

Just as a warm and inviting atmosphere makes people want to linger, a nurturing culture keeps employees engaged and committed. Foster open communication, provide opportunities for growth, and promote work-life balance. A culture that values and supports its employees is the secret sauce for reducing turnover.

Enhance employee engagement

Remember the importance of engagement we highlighted earlier? Well, it's time to give it a generous helping. Actively involve employees in decision-making, recognize their contributions, and foster a sense of belonging.

Offer competitive compensation and benefits

Employees need competitive compensation and benefits to stay satisfied. Conduct regular salary reviews, offer performance-based incentives, and provide comprehensive benefits packages. Show your employees they're valued, and they'll be less tempted by offers from other organizations.

Provide opportunities for development

Employees crave opportunities to grow and develop like a cake that rises to new heights. Offer training programs, mentorship initiatives, and clear career paths. By investing in their professional growth, you'll create a workforce that's motivated to stay and reach new heights within your organization.

Improve leadership and management

Effective leadership and management play a crucial role in reducing turnover. Train managers to be supportive, provide and collect regular feedback, and foster positive relationships with their teams. A strong leadership foundation creates an environment where employees feel valued and supported.

Conduct stay interviews

Conducting stay interviews allows you to understand what keeps employees committed. Regularly check in with employees to gather feedback, address concerns, and identify areas for improvement. It's like adding a touch of personalization to your retention efforts.

Embrace flexibility

Embrace flexible work arrangements, remote work options, and a healthy work-life balance. You'll create an environment that supports their personal and professional well-being by accommodating their needs.

Foster a positive work environment

A positive work environment lifts spirits and creates a sense of belonging. Encourage teamwork, celebrate achievements. Employees who enjoy coming to work are less likely to seek opportunities elsewhere.

How can businesses predict employee turnover?

How can businesses predict employee turnover rate?

Here are ways businesses can employ strategies to forecast and address potential turnover:

Analyze historical data

Businesses can analyze historical data to identify patterns and trends. Look at past turnover rates, reasons for departures, and any commonalities among employees who have left. This helps to uncover insights that can inform predictive strategies.

Conduct employee surveys

Conduct anonymous surveys to gauge employee satisfaction, engagement, and intentions to stay. Ask about their perceptions of the workplace, opportunities for growth, and overall job satisfaction. This anonymous feedback acts as a magic mirror, reflecting potential turnover risks.

Keep an eye on key indicators

Businesses must keep an eye on key indicators that may signal potential turnover. High absenteeism, decreased productivity, or a surge in employee complaints can be warning signs. By being attuned to these indicators, businesses can take proactive measures to prevent turnover.

Use predictive analytics

Predictive analytics can help forecast employee turnover by analyzing various data points. By leveraging sophisticated algorithms, businesses can identify at-risk employees, factors contributing to turnover and even predict when employees may consider leaving. It's like having a crystal ball that provides insights into the future.

Monitor competitor landscape

Stay informed about industry trends, job market conditions, and what competitors offer regarding benefits, perks, and growth opportunities. This knowledge helps businesses stay competitive and retain their top talent.

Employee turnover trends

Just as a roller coaster has its ups and downs, the world of talent retention is no different. So, hold on tight as we explore some fascinating statistics and trends that can help you navigate this exhilarating journey.

The Great Resignation: The employment landscape has recently witnessed a phenomenon known as "The Great Resignation." Employees, fueled by a desire for change and reevaluation of work-life balance, are leaving their jobs in record numbers.

According to a survey conducted by Microsoft, a staggering 41% of global workers are considering leaving their current employers within the next year.

Generational Shifts: Just as different roller coaster sections offer unique experiences, each generation brings its own perspective to the workforce. Baby boomers are retiring, making way for millennials and Gen Z to dominate the talent pool.

These younger generations seek meaningful work, career development, and positive company culture. According to Gallup, 21% of millennials say they've changed jobs within the past year, and 60% are open to new job opportunities (Source: Gallup, How Millennials Want to Work and Live).

These statistics paint a vivid picture of the current employee turnover landscape, urging businesses to adapt and embrace strategies that appeal to evolving employee expectations.

From navigating the wave of resignations to catering to the unique needs of different generations, understanding these trends is key to staying ahead of the curve.

How does high employee turnover affect business performance?

How does high employee turnover affect business performance?

High turnover can profoundly impact an organization's success. So, grab your aprons, and let's uncover how turnover impacts business performance.

Costly concoction

High employee turnover can be a costly affair for businesses. From recruitment and onboarding expenses to training and lost productivity. According to the Society for Human Resource Management (SHRM), the cost of replacing an employee can range from 50% to 200% of their annual salary. That's quite a dent in the budget!


Constantly training new hires and bringing them up to speed takes valuable time and resources away from core activities. It can lead to decreased productivity, lower team morale, and a strained work environment.

Customer satisfaction suffers

A team of experienced and engaged employees creates exceptional customer experiences. On the other hand, high turnover can leave customers with a bitter aftertaste. With new faces appearing regularly, customers may feel a lack of continuity and personal connection, impacting their satisfaction and loyalty.

Drain on knowledge and expertise

Experienced employees hold valuable knowledge and expertise. High turnover erodes this institutional knowledge, leaving the organization at a disadvantage. Losing seasoned employees means losing their insights, skills, and ability to mentor others—a significant blow to business performance.

Recipe for low employee morale

Just as a cake falls flat without the right leavening agent, high turnover can deflate employee morale. Witnessing colleagues leave can create uncertainty and dissatisfaction among the remaining team members. Low morale affects motivation, teamwork, and overall employee engagement, hindering business performance.

Strained reputation

A business plagued by high turnover may struggle to attract and retain top talent. Word travels fast in the professional world, and a reputation for frequent turnover can deter qualified candidates from joining the organization. This can limit the pool of talent and hinder the company's growth potential.

What is a healthy employee turnover rate?

What is a healthy employee turnover rate?

A healthy turnover rate refers to the optimal level of employee departures that promotes organizational growth while still maintaining a stable and engaged workforce. While there isn't a one-size-fits-all answer, here are some pointers to help you find your organization's unique sweet spot:

Context is the key

Like adjusting seasoning to suit different tastes, the ideal turnover rate varies based on industry, job roles, and organizational goals. Some industries, such as retail and hospitality, tend to have higher turnover rates due to the nature of the work. It's essential to consider the broader context before determining what's healthy for your specific situation.

Retention vs. innovation

A healthy turnover rate strikes a balance between retaining valuable employees and introducing new voices that can drive innovation and growth. Too low of a turnover rate may lead to stagnation, while too high can create instability.

Benchmarking for balance

Just as comparing your dish to industry standards helps gauge its quality, benchmarking against similar organizations can provide insights into what's considered a healthy turnover.

Research industry-specific turnover rates and compare them to your own to gain perspective. This can help you assess if your turnover rate is within a healthy range.

Focus on retention strategies

Like adding a dash of extra care to retain the flavor in a dish and investing in retention strategies can help maintain a healthy turnover rate. Focus on creating a positive work culture, providing growth opportunities, and recognizing employee achievements. By nurturing your existing talent, you can reduce the need for excessive turnover.

Analyze employee feedback

Just as tasting feedback helps refine a recipe, listening to employee feedback can provide valuable insights into turnover concerns. Conduct exit interviews and stay interviews to understand the reasons behind departures and gather feedback from current employees. This information can guide your efforts in maintaining a healthy turnover rate.

The cost of employee turnover rate

The cost of employee turnover rate

Just as a lavish feast can come with a hefty bill, high turnover rates can leave a dent in an organization's financial coffers. So, let's grab our calculators and delve into the world of costs that come with employee departures!

Recruitment and onboarding expenses

The recruitment and onboarding process can add flavor to an organization. However, the cost of sourcing, screening, interviewing, and hiring new employees can be quite substantial. Advertising job postings, conducting background checks, and investing in training programs all contribute to the bill.

Productivity loss

Like a leaky faucet that wastes water, high turnover can result in a significant loss of productivity. When employees leave, there's a gap in knowledge, skills, and experience that needs to be filled. New hires take time to get up to speed and reach their full potential, leading to a temporary decrease in productivity and output.

Training and development investment

When employees depart, the investment made in their development goes to waste. The cost of training new hires to reach the same level of proficiency adds another layer to the bill.

Customer impact

Like a dissatisfied diner who never returns, high turnover rates can impact customer relationships. Building rapport and trust with customers takes time and effort. When key employees leave, relationships may suffer, and customer satisfaction and loyalty may decline. This can lead to lost business opportunities and a negative impact on revenue.

Company culture and morale

High turnover can disrupt the harmony within an organization, impacting the overall culture and leaving remaining employees feeling demoralized and uncertain. This can lead to decreased motivation and decreased productivity across the board.

How to prevent employee turnover?

How to prevent employee turnover?

Just as a skilled magician knows the secrets behind their tricks, let's uncover the secrets to preventing employee departures and creating a harmonious work environment. Get ready to wield your retention wand and let the magic unfold.

Nurture a positive work culture

A positive work culture can work wonders in retaining employees. Foster a supportive and inclusive environment where employees feel valued and appreciated. Encourage open communication, recognize achievements, and create opportunities for growth and development. When employees feel connected and engaged, they're more likely to stay.

Provide competitive compensation and benefits

Providing competitive compensation and benefits is crucial for retention. Stay updated on industry standards and ensure your salary and benefits packages are attractive. Conduct regular market research to stay ahead of the curve and show employees that their hard work is rewarded.

Offer growth opportunities

Offering growth opportunities can keep employees engaged and committed. Provide clear career paths, mentorship programs, and opportunities for upskilling and professional development. Employees who see a future within the organization are more likely to stay and contribute their talents.

Foster work-life balance

Employees need a healthy work-life balance to thrive. Encourage flexible working arrangements, promote a culture of work-life balance, and offer wellness programs. Employees who feel supported in balancing their personal and professional lives are more likely to stay loyal.

Listen and act on feedback

Actively listen to your employees' feedback and concerns. Conduct regular employee engagement surveys, hold stay interviews, and create channels for open dialogue. Act on feedback, address issues and show employees that their voices are heard and valued.

How can an employee retention software like CultureMonkey help you curb employee turnover?

As we continue our quest to conquer employee turnover, it's time to uncover a powerful ally in our arsenal: employee retention software. Picture it as a trusty sidekick, ready to assist you in curbing turnover and creating a workplace that employees never want to leave.

One such software, CultureMonkey, holds the key to your retention success.

CultureMonkey offers a range of features to support your retention efforts. First, it allows you to conduct real-time pulse surveys to measure employee sentiment and engagement. By capturing feedback, you can identify areas for improvement and address concerns proactively.

The software provides actionable insights by analyzing survey data. These insights help you understand employee satisfaction and retention factors, empowering you to make informed decisions and implement targeted strategies.

CultureMonkey's engagement software helps you to  foster a culture of recognition and growth, you create an environment where employees feel valued and motivated to stay.

The software also establishes seamless communication channels for employees to anonymously share their thoughts and concerns. This open dialogue builds trust and enables early issue detection, allowing you to address challenges before they become retention risks.

With CultureMonkey's retention analytics, you can comprehensively view turnover patterns and trends. Understanding the underlying causes of turnover enables you to tailor your retention strategies and implement targeted interventions.
Embrace the power of employee retention software like CultureMonkey to tame turnover and create a workplace where employees flourish.